The measurement of preferences over the distribution of benefits: The importance of the reference point

This paper uses the Atkinson method, which was initially developed to measu re the shape of the social welfare function (SWF) in the domain of income, to measure the shape of the SWF with respect to the distribution of health benefits. Two separate studies were conducted involving a total of 71 respo ndents. A comparison of the results across the two studies suggests that re ference point effects play an important role in determining responses. Thus , more research is needed on the role that reference point effects ought to and do play in determining the nature and extent of the efficiency - equit y trade-off before the results of studies of this kind can be interpreted a s 'equity parameters' which may simply be 'plugged into' an appropriately s pecified SWF. (C) 2001 Elsevier Science B.V. All fights reserved.